A complete Financial blog with special emphasis on news, analysis and fluctuation in Indian Stock Markets & its indices NSE Nifty and BSE Sensex. Constant tracking of tug-of-war between the Bulls & the Bears. Also read about various Asset class such as IPO, Bullion, Commodities, Mutual Funds, Real Estate among others.

Saturday, April 25, 2009

Technically, Nifty has established a weekly close above 200 DMA levels which is perched around 3450. Though, for a confirmation of this trend of sustenance of Nifty above crucial Resistance of 200 DMA, we will wait to determine a weekly close above 3500 for the upcoming truncated week.

A weekly close above Nifty 3500 levels would mean an uptrend which could stretch as high as 3850-4250 on the upside. On the downside, Nifty has a strong support at 3300 and 3120. In my previous to previous post dated April 10, 2009 following content was posted for readers on Nifty Technicals:

CURRENT MARKET TECHNICALS:

We have successfully crossed crucial levels of Nifty 3240 which acted as a strong resistance for the last 5 and half months. This level of 3240 proved resistance for 4-5 times in the last few months. Now, the next resistance is at Nifty 3450 level which incidentally is an all important 200 DMA levels.

CRUCIAL 200 DMARESISTANCE:

Now, markets shall take a breather for some time around current levels or within a narrow Nifty range of 200-300 points lower from here as a pull back approach. Then again, markets are likely to re-test Nifty 3450 (for 1 or 2 times) to check its resistance strength. If in final analysis, markets succeed in crossing crucial Nifty 3450 level, we may well be in for a surprise rally towards Nifty 3850-4250. These ultimate targets of Nifty 3850-4250 may well be the highest point of current bear market rally, if we succeed to cross over 3500.

INTERVAL TIME FOR TRADERS:

Traders can remain cautious around Nifty 3400-3500 levels. They can book some gains around 3400 levels and wait for the volatility and pull back to fall out. They can again retain their long position if Nifty 3500 are crossed over which may engulf a new round of short-term rally. Nifty 2900-2950 should be an absolute Stop Loss for all kind of intermediate Long positions for the trading fraternity.

A 'Contra' call for traders would be to short the Nifty around 3400 levels with a Stop Loss of 3500 & book gains with initial target of 3240-3120.

As mentioned above, the markets faced resistance at Nifty 3410 and pulled back to 3310 for couple of days. Again markets have come back to re-test the crucial 200 DMAresistance and almost managed to sustain with a weekly close above it on the back of strong hold from bulls.

Nifty Traders: Traders can go Long on Nifty in around 3450-3500 range (preferably above 3500 closing) with upside Targets of 3850-4250 & observe a Strict Stop Loss of Nifty 3300 levels. Please note that the Stop Loss to be observed on Closing basis.

Stock Specific Trends:

In the same posting, i have made a narration of few more stock specific trends especially large-caps and mid-caps. Most of these stocks were predicted to have been topped out in short-term unless Nifty makes a fresh up move above its 200 DMAresistance.

SIGNS OF TIRING OUT:

These stocks are expected to take a small breather if the current rally is, in deed, to continue forward even from here: Reliance, Grasim, ONGC, Hero Honda, Bajaj Auto, Tata Steel among large-caps.

All the above stocks except Grasim (which inched a bit higher in last 1 week) seemed largely stuck to their ground as most of them had rallied sharply in the recent run up of markets as a whole. RIL continues to remain perched around Rs.1700-1800 levels, ONGC is stuck around Rs.800-900 and Hero Honda remains bound in 1000-1150 range in spite of better than expected results. Tata Steel made a high of around Rs.290 and slipped to Rs.240 odd only to recover around Rs.260.

Though, these stocks are likely to further their winning streak if Nifty manages to sustain and move forward above 3500 levels. These stocks will slowly move to make higher tops but at a slower pace than other markets laggards.

Dark Horses:

DARK-HORSES FOR SHORT-TERM RALLY:

Stocks to watch out for sharp bounce in the upcoming times are BajajFinserv, IDFC, LICHsg, Patel Engineering, I.Bull Finance, Videocon Industries, A.B.Nuvo, Thermax, R.Comm, SBI & BHEL. This mix of large-cap & mid-cap stocks have not moved up appreciably as compared to other stocks. And there is every possibility that they move faster to catch-up with their lag against the market on the back of their buoyant fundamentals.

The above writing has presence in my same posting dated April 10, 2009. BajajFinserv, LICHsg, Thermax, Rcom, SBI and BHEL have moved at a faster clip in the last 15 days of market movement. While SBI has graduated from Rs.1000 to Rs.1300, BajajFinserv has rised from Rs.150 levels to Rs.230 levels. LICHsg Finance has moved exuberantly from Rs.230 to Rs.340 at yesterday's closing. IDFC has witnessed a sharp run up from Rs.50 to Rs.75 during the period.

In my previous post dated April 15, 2009 on Implication of Satyam Acquisition, a clear cut Sell call was given for Tech Mahindra around Rs.370-380 zone. The stock had slumped to Rs.310 levels before recovering to Rs.340 along with markets.

Trading Ideas for Upcoming 15 sessions:

1) IDFC: This company from NBFC space has run up smartly from Rs.60 to reach Rs.75-78 range. If IDFC manages to conquer Rs.82 levels as a weekly close, it will graduate swiftly to its next target of Rs.95-109 in a quick period of time on the back of break-out on the upside. CMP Rs.75.

2) BHEL: Heavy Engineering major BHEL can be bought around Rs.1550-1630 with a Target of 1800-1950. Strict Stop Loss of 1500 is a must for trading in this Power Equipment major. CMP Rs.1639.

3) Videocon Industries: Buy Videocn in the range of Rs.105-120 with a quick target of Rs.150-160 with in few sessions. Strict Stop loss for this diversified conglomerate should be placed at Rs.90. CMP Rs.122.

4) Power Finance Corporation: If this Power Finance company sustains above Rs.160 for 2 consecutive days it will witness a break out for Targets of Rs.185-195. Stop loss for this stock can be observed around Rs.140-145. CMP Rs.157.

5) Power Grid Corporation: Power Transmission major PGCIL would witness a break out if it manages to sustain above Rs.105 for next week closing. The stock can later on soar to Rs.120-130 without much patience. Stop Loss Rs.90. CMP Rs.100.

6) L&T: This E&C giant is most likely to cross Rs.1000 & touch Rs.1050-1100 if Nifty manages to sustain above 3500 for next week.The stock will lead the rally along with other heavy weights to prop up the markets from here.

7) Investment Idea: Long-term investors can grab Gitanjali Gems if it falls back in the range of Rs.35-55 for some reason. It is a leading mid-cap from Gems & Jewellery space with bright prospects from long-term horizon.

NOTE: Readers are requested to keep any eye on break-out signal levels wherever mentioned specifically in above Trading calls. Like for IDFC, PFC & PGCIL levels to watch out for are Rs.82, Rs.160 & Rs.105 respectively, above which those stocks should witness a break-out. So, short-term trade should be executed only if such signal levels are crossed over.

Disclaimer: All data, content and/or reports posted by Viral RajnikantDholakia on this site are only for information and educational purpose of visitor/readers of this blog. It does not constitute to be a recommendation/offer/advice to buy or sell assets/securities in any form. Individuals/organizations are requested to take an informed call by consulting their Financial Advisor before acting on any matter/data published on this blog. This blog does not warrant of any kind of accuracy, adequacy and completeness of data, ideas or thoughts published in it. This site and Viral RajnikantDholakia assumes no responsibility or liability or loss or damage of any nature for your trading and investment decisions and its consequent results.

20 comments:

Excellent! Thank you for sharing your views. Your write ups are comprehensive and feels authentic cause of filtered content. I would like to sincerely appreciate your effort for such a reasonable market watch. Keep it up.

Thank you very much for the reply to my query related to "L&T value unlocking" as well as this article. It would be a great help.

One more thing that I would like to share with u is teh problem related to trading and my trading strategy to eliminate it.

Suppose when sensex is at P-levels.The two scripts namelyA is trading at Q-levels andB is trading at R-levels.

Now when sensex rises to S-levelsA is trading at T-levels andB is trading at U-levels.

Suppose difference between Q to T is 20% and the difference between R to T is 30%.

If I sell script A and enter into B then I am lossing around 10%.

To handle this what I do is as below...

Meanwhile I am investing major amount in long term scripts, I am investing somwhere around 50K in a trading script and booking the profit around the rise of 10%. I invest the 10% gained in L&T. This helps me a lot and makes me pretty sure of the success rate.

My example is little algebraic and abstract sorry for that, but wanted to convey the idea to everyone, hope it helps. I would also like your positeve or negative feedback and suggestions on the same.

Once I talked to u on yahoo messenger and liked ur attitude very much. Later, I tried to contact u several times on the yahoo messenger but found u offline. Anyways will meet u some other time when I find u online. It is hard to find helping people like u for no personal gains. I wanted to convey this to u. Keep it up.

Suppose difference between 'Q' to 'T' is 20% for a Script 'A'. That means that the scrip 'A' has appreciated by 20% as Sensex graduates from level 'P' to level 'S'.

Now, Suppose difference between Q to T is 20%. I dont see how this specific comparison is possible? Logically, 'R' needs to be compared with 'U', to determine the rate of appreciation for Script 'B'.

Comparing 'R' and 'T' is completely unrelated & a different ball game altogether. Level 'R' of script 'B' is from Sensex 'P' level, whereas levels 'T' is from Sensex 'S' level.

You can 'ADD' apples with apples and not apples with mangoes.

Though, understanding your basic intention of query... i guess, u mean to say that you are transferring those minor profits into good scripts as a conscious & strategic approach. Thats really good.One another approach that many investors, that i know, use is that they completely withdraw 'Extra' profits earned out of Equity as an asset class & park them in safer options like Debt instruments, etc. The plan may change from investor to investor depending upon his risk profile & investment duration period.

We'll definitely chat sometime when we both converge online at the same time. You can catch me online around 11.30 to 12.30 noon during weekdays. Do look for the bright yellow smiley sign signifying 'Online' status for clarity whether i am online or offline.

Downside for Moser Baer is capped around its crucial support levels of Rs.50 and subsequently Rs.40 where a strong support of 52 week lows are perched for the stock.

The stock may have factored in most of the negative news related to its corporate results. The company has incurred substantial losses in the last few quarters on the back of which it tested trough of Rs.41 around Mid-March.

Technicals of the stock are so stacked that the break-out for Moser Baer is very much feasible if the stock crosses Rs.72/- for 2 consecutive closes or a weekly close above it.Stop Loss for Traders should be firmly placed @Rs.62/- on closing basis.

The Target being Rs.80-82 around where it faces nearest possible Resistence on the upside break-out.If the stock manages to cross Rs.85 levels, the next target is steeply placed at Rs.120-132. Though, in the short-term, it is desirable to trade only with the nearest target of Rs.80-82.

What's your current take on the prolonged rally that we have seen over the last one month.It seems more than just a bear market rally . Will we see the markets going to 8000 again in the near future? Have we missed the bottom ?

I do feel this is a 'Bear Market Rally'. Though, it is also quite possible that we may consolidate for long in the current broad new range of 3150-3850-4250, if we are not to re-test the lows so soon.

Right now, 3500 is still acting as a resistence. With the breakout of flue around the globe, weakness is likely to prevail for some time & bears will be back in action to some extent.

Watch out for Nifty 3300 levels which will act as a support & below that last hope for bulls remain at Nifty 3150.

However, above 3500 break-out i am more optimistic of a surprise rally upto 3850-4250. But, in the very near-term that seems less likely unless the scare of the flue fades. Until then, politics will play it colors on the markets. If there is some complex coalition in the making for the top post of the country, that markets definitely dont like coalition politics which is fraught with uncertanity.

So, all-in-all, i would say... this may well be a bear market rally. But, over medium-term, we are likely to consoldiate in new broad range of 3150-4250. In that keep an eye on break out of 3500 for upside rally & 3300-3350 for downside support. Nifty 3150 should be last hope for bulls.

The latest results for the quarter Jan-Mar 2009 haven't been announced as yet. Though, from the performance of the past quarterly results of Moser Baer, this is what i have to say:

The Company's Q on Q growth in Sales & Operating Profits are improving in last 3-4 quarters & showing good consistency in growth in percentage terms.

But, the net profits are hit adversely on the back of the company's new business lines. The company has increased its investments in last 2 years to diversify into various multi-technology business lines like solar energy, home entertainment, manufacturing photovoltaic cells, etc.

If the company is able to fruitfully utilize its investments depending upon the success of its new business ventures in next 1 year... the company can again turn back in positive.

If the current trend of declining losses break-evens in next 1 year & turns positive in next 2 years... it could bode well for the company in future & for its shareholders.

While the actual performance of the company in the last 3 month is known by accessing Quarterly results, Annual results is nothing but a sum total of all the 4 quarters.

So, in short, the company has swinged back in Green much faster than my expectation, which is a positive news. It's a good result, you should not worry.

But, Remember one Maxim...Do not invest in such emerging/mid-cap stocks above your risk capacity. Limit the holding of such individual stocks in your portfolio to the extent 4-6% of your over-all portfolio value.

Do not let any specific stock dictate your portfolio returns. Make your portfolio less reliable to fluctuation & fortunes attached with any specific company, no matter even if it is best of the best company.

Lastly, the quarterly results of Moser Baer are positive & the negative tick in the annual results is quite expected as per sum-of-the-parts of all the 4 quarters.

And, one thing to point over here... your cost of acquisition @Rs.60/- is reasonably cheap & bankable. But, do not forget my point mentioned above for stock specific weightage in your portfolio.

However, the answer to your question is relative in nature. As trading can be of various different types & nature. Some trade may offer 5% returns, some may offer 10% and some may also offer 100% returns if your bet goes right.

Suppose you're betting for a 10% gain in a month, you have to invest Rs.5 lakhs to get a return of Rs.50 thousand. Its simple arithmatics.

On the other hand, if you are game for speculation in some stocks where you expect 100% return, you have to invest only Rs.50 thousand to earn a profit of Rs.50 thousand.

I guess... your purpose/aim of asking the question is not put in proper detail of what you are actually trying to convey as your query. May be, you aim to ask something more complex which i miss to gain from your above query.

Thanks once again great post, I was reading your comments to shalu regarding videocon...I trust this company and feel that it is a drak horse but recent results were disoppointing can you throw some light on videocon

Videocon has been witnessing declining profit & sales since the onset of the ongoing slowdown. The company has been reporting declining net profits post March-June 2008 quarter. The fall in profits is even more alarming since Oct-Dec 2008 quarter to date.

Comparing its latest results for the quarter eneded January-March 2009 with its profits in the corresponding quarter in the previous financial year... the net profits have come down from Rs.251 crore in the quarter March 2008 to Rs.73 crore in the quarter March 2009.

The sales & profits of the company are adversely impacted by the current slowdown. However, the company has taken various steps to diversify its business right from Consumer electronic goods to Oil & Gas business. The company shall retain the lost ground as and when the recovery is visible in the economy over the longer duration as and when the consumers are willing to shell out more from their pockets.

Its a Long-term Buy story from Mid-cap space. Traders can also take position around Rs.100-115 with a target price of Rs.153 and SL of Rs.90/-. Traders should watch out for a break above Rs.133/- for real signs of strength in the near-term.

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Date: January 30, 2009.

My ViewWith Union Budget round the corner, one can expect Nifty to remain range bound from 4750-5050 & take a directional cue after the Budget outcome. The post-budget bias could be tilted towards the downside as FM could be gearing to withdraw selective sops given to the industry during the recent slowdown & pull the economy out of record deficit.